FAR450 DEC 2014

SUGGESTED SOLUTION
QUESTION 1
a) Gain or loss on the subsequent acquisition of Juara Bhd

RM
Million
Consideration transferred
Fair value of net assets on 1/7/13
OSC
Retained profit

2000
1240
3240 x 15%

Gain to other component of equity

RM
Million
486

Dr Non-Controlling interest
Cr Other component of equity
Cr Investment

RM
Million
480

(486)
6
RM
Million
6
480

(10 x 1/2 = 5 marks)

b)
Goodwill on consolidation-Juara Bhd
RM
Million
Consideration transferred
NCI (25%x3220)

RM
Million
2500
805
3305

Net assets at date of acquisition 1/7/12

OSC
Retained profit

2000
1220
3220
85

Goodwill on consolidation
Goodwill on consolidation-Gagah Bhd
RM
Million
Consideration transferred
NCI (40%x6150)

RM
Million
3,614
2,460
6,074

Net assets at date of acquisition 1/1/14

Share capital
Retained profit b/f
CY profit [(400 + 80 ) x 6/12 ] - 80
FV adjustment

4000
1490
160
500
(6,150)
(76)

Bargain purchase
1

FAR450 DEC 2014

Schedule of Retained Profit and NCI

RM
Million

RM
Million

Group RP
RM
Million

NCI at 1/7/12 - Juara Bhd

Decrease in NCI Juara Bhd
NCI at 1/1/14 - Gagah Bhd
Retained profit Juara Bhd
Balance b/f
Pre
CY profit

NCI
RM
Million
805
(486)
2,460

1240
(1220)
20
240

Retained profit - Gagah Bhd

Balance c/f (1890 1490 + 80 ) x 6/12
Amortisation leasehold prop 500/25 x 6/12

(75%) 15
(90%) 216

(25%) 5
(10%) 24

(60%) 138

(40%) 92

7565
76
(0.4)
90
8,099.6

2,900

240
(10)
230

Retained profit - Wira Bhd

Balance c/f
Bargain purchase
Urp: inventory
Dividend receivable 90% x 100
CSOFP

Wira Bhd and its subsidiaries

Consolidated Statement of Financial Position as at 30 June 2014
RM
Million
Non-Current Assets
Property, plant and equipment (12086+3095+5735) + 500 - 10
Goodwill on consolidation
Current Assets (16415+3385+5265) + 1-3.5 - 0.4

Share Capital and Reserves

Ordinary shares 10000 + 1600
Share premium 2250 + 1600
Retained Profit
Other component of equity - Gain on subsequent acquisition
NCI
Non-Current Liabilities (2650+950+1610)
Current Liabilities (9430+2050+3500) -2.5 - 90

21,406
85
25,062.1
_______
46,553.1
11,600
3,850
8.099.6
6
2,900
5210
14,887.5
46,553.1
(50 x = 25 marks)

FAR450 DEC 2014

c.
Hebat Bhd cannot be excluded from consolidation on the grounds of dissimilar activities.
If a group contains diverse business activities, relevant information is to be provided by
consolidating such subsidiary and disclosing additional information in the consolidated
financial statement about the different business activities of the subsidiary ie. segment
disclosure.
(5 x 1 = 5 marks)
(Total: 35 marks)
QUESTION 2
(a)
RMmillion
720

Net profit before tax

Adjustments for:
Share of profit of associate company
Depreciation
Impairment of goodwill
Bad debt
Gain on disposal of machine
Operating profit before working capital changes

(100)
350
98.5
10
___(35)
1,043.5

W1

(8 x = 4 marks)
W1
Goodwill
RMmillion
Bal b/d
Acquisition
(b)
Goodwill on acquisition of Laut Bhd:
CT
+) NCI (25%x2430)
FVNA
Goodwill (given)

RMmillion
98.5
940

861 Impairment
177.5 Bal c/d

2200+420+300+140-630

RMmillion
2,000
607.5
2,607.5
(2,430)
177.5

CT in cash: 2,000m-(1,000mxRM1.2) =RM800mill cash in subRM140mill=RM660mill

(8 x = 4 marks)

(c)
Cash flows from financing activities
Proceeds from issue of share capital
Issue of 5% debenture
Dividend paid to non controlling interest
Dividend paid

RMmillion
W2 2,960
600
W3(19.5)
W4 (499)

(14 x = 7 marks)

FAR450 DEC 2014

Bal c/d

W2 OSC
RMmillion
Bal b/d
Acq of sub
18560 New issue

RMmillion
15000
1000
2560

Bal c/d

W2 SP
RMmillion
Bal b/d
Acq of sub
940 New issue

RMmillion
340
200
400

W3 NCI
RMmillion
19.5 Bal b/d
Acq of sub
2704 Profit

RMmillion
2000
607.5
116

Dividend
Bal c/d

FAR450 DEC 2014

Dividend
Bal c/d

W4 RP
RMmillion
499 Bal b/d
2070 Profit attributable

RMmillion
2220
349

QUESTION 3
a)
Smile Bhd
Consolidated Statement of Profit or Loss and Other Comprehensive Income
For the Year ended 30 June 2014P
RM000
Revenue
Cost of sales
Gross profit
Income from other
Investments
Bargain purchase
Operating expenses
Finance cost
Share of associate's profit
Profit before tax
Taxation
Profit for the year
Other comprehensive incomeP
FV gain on AFS
Total comprehensive income

(90,000+45,000) P + (49,800 x 9/12) P5,240 P

(45,000+21,000) P+(18,000 x 9/12) P5,240 P + 120P

1,200 P+(900 x 9/12) P

(13,700+6,000) P+(4,500 x 9/12)P [Depn
adj: nil ] P**
(2,000+2,200) P+ (2100 x 9/12) P
(8,000 P-100 P) x 25%P
(7,800+4,100) P+(6,600x9/12) P

167,110
(74,380)
92,730
1,875
1,500 P
(23,075)
(5,775)
1,975
69,230
(16,850)
52,380
450 P
52,830

Profit attributable:
Owners of the parent
NCI (W1)

42,471 P
9,909
52,380

Total comprehensive income attributable to:

Owners of the parent
42,471 + 450
NCI

(W1) Profit for the year attributable to NCI:

Laugh Bhd (12,100 P- 120P - 400 P )x30%P
Giggle Bhd (19,800P-300P)x9/12Px 44%P

42,921 P
9,909 P
52,830

3,474
6,435
9,909

FAR450 DEC 2014

(34P x = 17 marks)
P** Examiners: Award this tick if students do not show the adjustment for the depreciation
from the sale of equipment by Giggle to Laugh . This is a preacquisition sale and should not
have any effect on depreciation.
b)
Smile Bhd
Consolidated Statement of Changes in Equity
for the year ended 30 June 2014 P
RP
RM000
Balance brought forward
Consideration transferred : Giggle
(28,700 x 30%)
Acquisition drg the year
Profit for the year
TCI for the year
Ordinary dividend paid
Balance carried forward

(W2) 27,450

Wave -b/f
Preacquisition
Post acquisition
Underdepreciation (1 yr)

(W3) 8,900
(8,610) PP
10,750 P

42,471
(2,500) P
67,421
=====

9,909
(W4) (400)
20,549
=====

RM000
20,000
750 P

W2 RP Bal b/f
Grp bal b/f
Bargain purchase - Laugh
Laugh - bal b/f
Preacquisition
Post acquisition

NCI
RM000

18,000
(10,000) P
8,000
x 70% P

5,600

8,000
(3,500) P
4,500
(100) P
4,400
x 25% P

W3 NCI b/f
Laugh
FV on DOA (1/7/2011)
RP from 1/7/2011 to 30/06/2013

1,100
27,450

RM000
8,000P x 30%P

6,500
2,400
8,900

FAR450 DEC 2014

W4 Dividends to NCI
Laugh
Giggle

RM000
300 P
100 P
400

1,000 x 30%
500 x 20%

(16P x = 8 marks)
QUESTION 4A(i)a
Mawar Bhd disposed part of its interest (25%) but retains sufficient shares (60%) to exert
control over Cempaka Bhd after the disposal date. Therefore, there is no change in the
relationship as Mawar Bhd is still the parent & retains control of Cempaka Bhd although
there is a decrease in the controlling interest.
( 6 X mark each = 3 marks)
QUESTION 4A(i)b
With the decrease in the controlling interest of Mawar Bhd in Cempaka Bhd, the noncontrolling interest would therefore increase from 20% to 40% after the disposal date.
( 4 X mark each = 2 marks)
QUESTION 4A(ii)

Proceed
Carrying value of investment
Net assets on 1/1/2014
Goodwill

2.5m x 25%
4.5 m x 20%

Gain on disposal

Mawar Bhds
financial statement
RMmill

Groups
Consolidated
financial statement
RMmill

1
(0.625)

______

(0.9)
-
______

0.375

__0.1

(10 x mark each = 5 marks)

QUESTION 4A(iii)
It is necessary to compute for both Mawar Bhds financial statement and the groups
consolidated financial statement because the gain or loss on disposal in Mawar Bhds
financial statement is the difference between the proceeds received/receivable from the
disposal of interest in the subsidiary less the carrying value of the assets/investment .
Meanwhile, the gain or loss on disposal for consolidation purposes is the difference between
the proceeds received/receivable less the proportionate amount of net assets of the
subsidiary existing on the date of disposal . In this case, the parents share of the postacquisition increase in the net assets of the subsidiary has been recognized. This takes
into account the related net assets of the subsidiary that are being disposed of and not just
the carrying amount of the investment.
(10 x mark each = 5 marks)

FAR450 DEC 2014

QUESTION 4B(i)
The 48% interest in Puncak Bhd held by Alam Bhd would be sufficient to give it control of
Puncak Bhd. This is based on the absolute size of its holding and the relative size of the
other shareholdings in Puncak Bhd, which give Alam Bhd sufficient dominant voting
interest to meet the power criterion without the need to consider any other evidence of
power.
5 x 1 mark each = 5 marks

QUESTION 4B(ii)
Sering Bhd does not have power over Perdana Bhd based on the size of Sering Bhds
voting interest and its size relative to the other shareholdings. Tabah Bhd and Medan Bhd
just need to cooperate to be able to prevent Sering Bhd from directing the relevant
activities of Perdana Bhd.
5 x 1 mark each = 5 marks